After years of speculation, ESPN is going to be launching a sportsbook. The “Worldwide Leader” has inked a $2 billion deal with PENN Entertainment to launch ESPN BET this fall in the 16 states where the casino operator has gambling licenses. This will replace the Barstool Sportsbook, which was announced in early 2020 in partnership with Barstool Sports. PENN Entertainment later acquired the remaining 64% stake in the company for $388 million, granting it full oversight as it pertains to the company’s operations and content. Dave Portnoy, the founder of Barstool Sports, reacquired the company from Penn Entertainment as part of the agreement. If the company is to be sold again, Penn will get 50% of the gross proceeds.
Penn Entertainment is paying ESPN $1.5 billion over 10 years to acquire media, marketing services, branding and additional rights owned by the company, along with an additional $500 million in warrants that will vest throughout the term. The company also has the right to extend the contract for another 10 years upon a mutual agreement. ESPN talent will be involved in the endeavor, which comes just months before a revamped programming lineup that will include Pat McAfee bringing his digital program to the network’s various platforms.
“Our primary focus is always to serve sports fans and we know they want both betting content and the ability to place bets with less friction from within our products,” said Jimmy Pitaro, chairman of ESPN, in a statement. “The strategy here is simple: to give fans what they’ve been requesting and expecting from ESPN. PENN Entertainment is the perfect partner to build an unmatched user experience for sports betting with ESPN BET.”
ESPN will work in tandem with Penn’s responsible gaming programming and promote responsible gambling practices. Some of the actions the company will take include developing its own committee for responsible gaming to review policies, compliance and programming, along with collaborating with industry experts on best practices. At the same time, the network will retain a level of journalistic integrity in its work and in covering the sports betting domain.
“This transformative, exclusive agreement with ESPN marks another major milestone in PENN’s evolution from a pure-play U.S. regional gaming operator to a North American entertainment leader,” Jay Snowden, Penn’s CEO, added. “ESPN BET will be deeply integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem. ESPN BET will also benefit from PENN’s operational experience, extensive market access and proprietary technology platform, which successfully debuted in the U.S. this July.”
Penn National estimates that the deal will create $500 million to $1 billion of annual long-term adjusted EBITDA potential in its interactive segment. The news comes just days after Flutter Entertainment and FOX Corporation announced a phased closure of FOX Bet’s operations between July 31 and Aug. 31, 2023. Penn National stocks surged 20% upon the company’s announcement late Tuesday.
“Our agreement with ESPN will provide us access to the largest ecosystem in sports, with 105 million-plus monthly unique digital visitors, an audience of more than 370 million across social platforms, 25 million ESPN+ subscribers and the nation’s No. 1 fantasy database,” Snowden added. “PENN’s ability to leverage the leading sports media brands in both the U.S. and Canada with ESPN and theScore, combined with our newly launched sports betting app, will allow us to significantly expand our digital footprint and catapult ESPN BET into a strong podium position in this space.”
